Will Gildan's HanesBrands Deal Create a Global Apparel Powerhouse?

Gildan Activewear Inc. (GIL) is set to acquire HanesBrands Inc. (HBI) in a transaction valued at approximately $2.2 billion in equity and $4.4 billion in enterprise value. The merger will bring together Gildan’s leadership in activewear with HanesBrands’ leading innerwear retail presence, creating one of the largest players in basic apparel. Under the agreement, HanesBrands shareholders will receive 0.102 Gildan shares and 80 cents in cash per share, valuing the stock at $6.00, a 24% premium to its Aug. 11 closing price. Upon completion, HanesBrands investors will own about 19.9% of Gildan’s shares on a non-diluted basis.

GIL Merger Aims to Boost Scale and Efficiency

The transaction, unanimously approved by both boards, is expected to close in late 2025 or early 2026. The merged company will have pro forma annual revenues of $6,883 million and adjusted EBITDA of $1,553.8 million, including $200 million in anticipated annual cost synergies to be realized within three years, about $50 million in 2026, $100 million in 2027 and $50 million in 2028. Gildan expects immediate accretion to adjusted earnings per share (EPS), with more than 20% accretion once synergies are factored in.

The combination will expand scale and strengthen market positioning, enhancing go-to-market capabilities and product diversification. Gildan’s low-cost vertically integrated production model will be utilized to optimize HanesBrands’ operations, expand brand presence in activewear and diversify product categories. HanesBrands will retain a strong presence in Winston-Salem, while Gildan’s headquarters will remain in Montréal.

GIL Secures Financing and Outlines Strategic Path

To finance the acquisition, Gildan has arranged $2.3 billion in committed funding, consisting of a $1.2 billion bridge facility and $1.1 billion in term loans. In addition, Gildan plans to refinance HanesBrands’ revolving credit facility, term loans, unsecured notes and short-term debt totaling roughly $2 billion.

Following the deal’s completion, Gildan expects its net debt leverage to stand near 2.6x adjusted EBITDA. Share buybacks will be on hold until leverage approaches the midpoint of the target 1.5x-2.5x range, with a goal of bringing the ratio down to 2.0x or less within 12-18 months post-closing.

GIL Reaffirms 2025 Guidance & Issues Three-Year Outlook

Gildan has reaffirmed its full-year 2025 revenue and EPS targets as outlined in its second-quarter earnings release. Factoring in the planned HanesBrands acquisition, the company expects 2026-2028 net sales growth at a CAGR of 3-5% and adjusted EPS growth in the low-20% range. Capital expenditures are expected to average 3-4% of sales per year, to support long-term growth and vertical integration.

Shares of this Zacks Rank #3 (Hold) company have climbed 11.3% in the past month, outperforming the broader industry, which declined 1.2% during the same period.

Key Picks

Ralph Lauren Corporation (RL) designs, markets and distributes lifestyle products in North America, Europe, Asia and internationally. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for RL’s current fiscal-year sales and earnings indicates growth of 6% and 19.8%, respectively, from the year-ago reported figures. Ralph Lauren delivered a trailing four-quarter average earnings surprise of 8.5%.

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The Zacks Consensus Estimate for RVLV’s current fiscal-year revenues implies growth of 6.8% from the year-ago actuals.

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This article originally published on Zacks Investment Research (zacks.com).

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